The board of Hunter Hall Global Value has accused Wilson Asset Management of making misleading claims about a proposed asset buyback in a “brazen and blatant” attempt to seize control of the LIC.
Speaking to InvestorDaily, Hunter Hall Global Value (HHV) chair Paul Jensen said Wilson Asset Management’s (WAM) proposed resolutions to replace the LIC’s current board of directors and offer an equal access share buyback at net tangible assets (NTA) was part of a move to gain control of the company at the expense of investors.
“With the current 3 per cent share price discount to NTA, the equal access share buyback they’ve proposed will destroy value for shareholders, it would cost more than the current discount to net tangible assets and shareholders would be better off selling their stake on the market,” he said.
“Wilson Asset Management refuses to acknowledge whether or not they would participate in an equal access share buyback. This is a brazen and blatant attempt to take over the company without paying for it.”
Mr Jensen said the “so-called independent directors” proposed by WAM to replace the current board were simply “acting under instruction” and that shareholders should consider the recommendations made by independent governance firm Glass Lewis, which said the current board is “the best qualified to govern in a manner which will be consistent with the interests of all HHV shareholders”.
“We as a board are very concerned by the false and misleading information being put to the market by Wilson Asset Management, their claims are without any substantiation and [WAM chair and portfolio manager Geoff Wilson] will not debate the real and substantive issues of his proposed buyback or the lack of independence of his nominees,” Mr Jensen said.
“It’s all designed to scare and destabilise their share register, throwing retail investors under the bus so WAM can take control of the company.”
Mr Wilson defended his proposed replacements for the board, however, saying they were "independent, ethical, highly skilled and aligned with shareholders’ interests" and will allow shareholders to vote on the buyback.
"If a vote for a buyback is successful, HHV can undertake the required capital management initiatives. The investment portfolio is highly liquid and a professional investment manager should be able to manage inflows and outflows of capital with ease," he said.
Additionally, Mr Wilson said WAM had no intention to take control of the LIC, nor would it be possible for the company to do so given a management agreement between HHV and its parent company Hunter Hall Limited.
"HHV has underperformed its benchmark for the last seven years and Hunter Hall was paid more than $32 million in fees over that period. HHV has also underperformed over five-year, three-year, one-year and six-month periods," he said.
"Hunter Hall, as the investment manager of HHV, controls the investment portfolio and many of the operations of HHV under a watertight 12-year management agreement until 2029. Wilson Asset Management cannot and does not seek to control HHV. Irrespective of who the directors of HHV are, Hunter Hall will continue as investment manager of HHV for another 12 years.
"With significantly reduced directors’ fees, the new board would hold Hunter Hall to account for its poor performance. The new board would also improve the company’s corporate governance, investment manager oversight, capital management and shareholder engagement, while being paid significantly less than the current board."